Finance Sahrudaya Health Care Pvt. Ltd. (2017): Towards a Term Sheet
In 2017, Sahrudaya Healthcare Pvt. Ltd. (SHPL), a successful chain of corporate hospitals based out of Hyderabad, India, approached private equity (PE) firm Samara Capital for a capital infusion. After conducting a thorough due diligence and evaluation of the company, Samara Capital brought its major limited partner (LP) Medicover, a European multinational healthcare and diagnostics company, into the decision-making process. In a surprise turn of events for SPHL, Medicover offered to become a strategic partner and invest in SPHL. With the new proposal on the table, top executives from Samara Capital, Medicover, and SHPL attended a high-level meeting in New Delhi to discuss the modalities of the term sheet.
- To introduce students to the concepts of raising capital via private equity with attendant risk and return
- To examine a full range of financing alternatives (invoking the pecking order theory, namely internal accruals, angel financing, venture capital financing, debt, private equity, etc.
- To attempt firm valuation
- To draft a term sheet by assessing the various terms and conditions under which an investment is to be made
Finance Indian Railways and the Move to Full Electrification: Exceeding the Global Benchmark
The Indian Railways (IR), the country's largest transporter, is considering a plan to fully electrify its network. The move will cut its fuel expenditure by a whopping 50%. However, the project will require a capital investment of INR 350 billion (approximately USD 4.9 billion1). The investment is beyond the normal capital that is available for annual investment, as the IR is not run with a profit mindset and has limited retained earnings. Therefore, the IR has to consider potential financing options. The proposed investment also requires the IR management to overcome numerous operational changes in areas such a rolling stock, crew, usage of fueling depots, training, disposal of usable diesel locomotives, etc. The electric-based platform appears to be where the industry is headed worldwide, and potential future cost savings may also be possible if the IR moves to this platform. The project would make India the first country in Asia to move to complete electrification, establishing it as a pioneer in the rail industry and boosting national pride. It would reduce the country's reliance on imported fuels and help with the nation's balance of payments, thereby advancing its economic agenda. A third non-financial but national objective of the project would be a significant reduction in carbon emissions. The board of the IR is tasked with examining various aspects of the proposed electrification project and deciding whether or not to approve the idea. The case requires students to make a decision as to whether or not the savings are worth the investment and resource allocation.
This case will help students- - Understand the costs and benefits, both direct and indirect, that are part of any comprehensive capital budgeting calculation - Go beyond simple cost-benefit analysis and consider national policy and societal outcomes - Evaluate the considerations around the adoption of one technology over another and the related changes, such as the potential impact of this technology on government priorities - Utilize an opportunity to conduct a net present value (NPV) analysisLearn More
Finance Wagholi Apartment Project: Restructuring a Private Equity Investment in Real Estate
This case is written from the perspective of a decision-maker at a private equity investment fund. The case is set in India, where a large corpus of capital sourced from the United States was deployed from the early 2000s onwards. It looks at the manner in which a private equity real estate fund evaluates the implications of RERA in India, in particular, the continuation vs. exit decision when a project encounters obstacles that delay its completion.
- To understand how the regulatory framework interacts with execution risks to amplify the risk profile of a real estate project; and
- To understand how RERA alters the costs associated with the choice set faced by investors when a project faces impediments that delay its completion.
Finance Gold: A Distinct Asset Class
Gold is a very popular alternative asset class globally. This note looks at the properties of gold that make it so attractive. The note also compares the performance of gold against various other asset classes and its correlation with them.Learn More
Finance Merlion Investments: Investing in Collectible Assets
The case describes a fictitious family office (FO), Merlion Investments, and the efforts of a junior family member, Leong Yew Kong, to convince his uncle and his grandfather to make an allocation to collectible assets. Similar to many family offices, Merlion Investments pursues a relatively conservative investment strategy; only 20% of its assets are allocated to riskier opportunities designed to grow the family's wealth. Yew Kong, who has worked diligently under his uncle's guidance for years, wants more responsibility. After doing his own research, Yew Kong believes he has identified an opportunity to carve out his own niche in the portfolio by investing in collectibles. The case is constructed to illustrate the real-world challenge of investing in non-traditional assets, in this instance, collectibles. Background information on five different collectible assets is provided in the case that students can use to discuss a) whether his uncle, Tan Chee Keong, and Merlion Investments should agree to Yew Kong's suggestion, b) which collectibles to invest in and through what vehicle, c) how much capital to allocate, and d) what kind of skills or expertise the team would need to successfully manage these investments.
The case illustrates the real-world challenge of investing in non-traditional assets. The case provides an introduction to family office investing and describes five collectible assets representing extremely different opportunities. Students will develop an understanding of important fundamental tradeoffs in asset allocation, and how individual capabilities, interests, and interpersonal issues affect investment decision making, especially in a family office context.
Finance The Indian Fast Moving Consumer Goods (FMCG) Industry
Background note for "Patanjali Ayurved: Valuation of an Unusual FMCG Company in India", case ISB178.Learn More
Finance Patanjali Ayurved: Valuation of an Unusual FMCG Company in India
An investment analyst at a fictional wealth fund (SWF) is concentrating on India's high-growth, high-potential fast moving consumer goods (FMCG) sector and selects a few strong performers in both public and private markets to recommend to the management as an investment. The Indian FMCG sector has been trading at high market multiples compared to other sectors, and thus, he also needs to analyze if these high valuation levels are justified. In valuing Patanjali, a privately-held company that is a very strong performer with an unusually rapid growth trajectory, he needs to factor in both tangible and intangible information, giving special attention to the company's unusual origins and atypical management.
- To give students a sense of how to go about analyzing a particular sector for investment considerations.
- To give students a perspective on valuing public companies, introducing certain valuation methodologies along with their relevance and emphasizing the importance of company- and sector-specific nuances in valuation.
- To introduce students to the valuation of private companies, emphasizing the importance of intangible company-specific factors in reaching an investment decision.
Finance Rising Sun Towers: Private Equity Investment in Residential Real Estate
In December 2010, Shridhar Sethuram was evaluating an investment in a joint development of residential flats in Gachibowli, an information and technology (IT) hub near the city of Hyderabad in central India. Sethuram and his team at AMII Advisors, a private equity (PE) investment firm, had recently raised US$170 million with a mandate to invest the funds in the real estate market in India. Sethuram, on behalf of his investment firm, had to decide whether to invest in the Gachibowli project and how to structure the investment deal. This case is written from the perspective of a decision maker at a private equity investment fund. It provides a look at the manner in which a private equity real estate fund evaluates an opportunity and structures a real estate investment in a developing country. The case is set in India, where a large corpus of capital sourced from the US has been deployed since the early 2000s.
The case explores the rationale for international investment and typical issues that arise when dealing with developers. Students assess the rationale for the investment the case protagonist is considering, the risks associated with the project, the potential returns to investors, and the structure of the investment.
Finance Thomas Cook India: Potential Unleashed - A Journey to Value Creation
The case gives students an opportunity to analyze the ways in which the company's management uses Prem Watsa's value investment philosophy to guide its decisions, both in its core business and in its acquisitions. The case also gives students lessons the value investment philosophy offers to investors and managers of firms. The travel industry is beset by structural changes and new paradigms and owners have to respond to the changing environment.
The changing fortunes of TCI are most apparent in the increase in its share price after making several acquisitions. The case gives students an opportunity to analyze the ways in which the company's management uses Prem Watsa's value investment philosophy to guide its decisions, both in its core business and in its acquisitions. The case also gives students an idea of how travel companies in India have had to adapt to new paradigms and what lessons the value investment philosophy offers.Learn More